Which of the following factors would increase the likelihood that a company woul

Question

Which of the following factors would increase the likelihood that a company would call its outstanding bonds at this time?

A provision in the bond indenture lowers the call price on specific dates, and yesterday was one of those dates.

The flotation costs associated with issuing new bonds rise.

The firm's CFO believes that interest rates are likely to decline in the future.

The firm's CFO believes that corporate tax rates are likely to be increased in the future.

The yield to maturity on the company's outstanding bonds increases due to a weakening of the firm's financial situation.

Explanation / Answer

Answer:A provision in the bond indenture lowers the call price on specific dates, and yesterday was one of those dates

Explanation: An indenture to call bonds at lower prices, would be a definite factor to increase the likelihood of company to call its outstanding bonds

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